The
evaluation carried out so far has been essentially in terms of
physical suitability. An assessment has been made of whether
different kinds of land use can be undertaken on a sustained
basis.

In Step 6,
the effects of each alternative use are appraised in
environmental, economic and social terms.

Obviously,
these aspects have not been ignored: they generally guided the
identification of promising options at Step 4. Now, those that
passed this first test are formally appraised against the
selected criteria. In this step, it is essential to examine
land-use proposals from the standpoint of the capabilities and
incentives of individual land users.

Box 8Measuring the worth of a land-use system

 Gross margin. The market value of the produce minus the variable costs that are attributable directly to the product (in the case of an agricultural crop - seeds, fertilizer, fuel, water, labour, hired machinery, etc.).

 Results of gross margin or net margin analysis can be interpreted in several ways:

- Which is the best land for each crop or land-use type?- Which is the best use for each land unit?- Will a proposed change be profitable?

 Partial farm budgeting, calculating only the effects of any proposed changes in land use, is a simple way of projecting the farm-level effects for representative farmers. The difference between net income accruing under a present and an alternative land use is usually referred to as "returns". Investment, maintenance and other costs needed to bring about desired changes in land use are referred to as "costs" .

 Where capital investment is involved - for example in land improvements that will lead to a stream of benefits over a long time - discounted cash flow analysis can be used to place the costs and benefits on a comparable basis, i.e. their present value. Money earns interest so its value increases over time. In the same way, income promised in the future is worth less than the same income now, and its present worth can be calculated by the reverse of interest, called discounting. The interest rate assumed for discounting is called the discount rate.

 Discounted cash flow analysis of all benefits and all costs to their equivalent present value produces three measures of the worth of a stream of income which can be used to compare land development options with alternative opportunities for investment:

One way of
doing this is to model the performance of different options and
their effects on representative land users. A word of caution is
necessary: quantitative data are not necessarily better, more
reliable or more accurate than qualitative data. Sophisticated
models need a lot of data and make assumptions that should be
clearly understood before the models are applied to particular
problems. There will be many cases where a qualitative judgement
is more appropriate.

Environmental
impact

The land
suitability evaluation has already classified as "not
suitable" any land use that continually degrades the land.
An analysis of environmental impact goes further. It compares
what will happen under each alternative system of management in
terms of the quality of life of the whole community and takes
account of effects both within and beyond (off-site effects) the
planning area.

In-depth
knowledge of physical, chemical and biological processes and how
these interact with society is needed to foresee the likely
environmental impact of a specific land-use system. Often, the
impact of a particular activity may be long term or several
stages removed from the primary cause of the problem. For
example, in Sri Lanka coastal erosion and flooding have been
caused by the exploitation of protective underwater coral
barriers for lime production. In West Africa, current coastal
erosion has been attributed to big dams, built on major rivers
over 20 years ago, which have intercepted the supply of sediment
to the coastal zone (Plate 5).

Following
are examples of the environmental effects to be considered:

 Soil
and water resources. Hazard of soil erosion, landslides and
sedimentation; security of water supply and water quality within
and beyond the planning area.

 Pasture
and forest resources. Degradation of rangelands, clearance or
degradation of forests.

 Scenic
and recreational value for tourism and leisure industries.
Tolerance of the disturbance associated with leisure, and
compatibility with other land uses.

Economic
analysis

In Step 5,
land suitability is expressed either in qualitative terms
(highly, moderately and marginally suitable, or not suitable) or
in quantitative physical terms (e.g. crop or timber yield). By
comparing the production and other benefits with inputs in terms
of money, an extra quantitative measure of land suitability is
provided (see Financial and economic analysis, p. 81).

An
underlying assumption of financial and economic analysis is that
market prices, established in competitive markets, reflect social
values. Where there is no competitive market for a resource,
which is often the case with renewable land resources and family
labour, some other measure of worth has to be found.

Financial
analysis looks at profitability from the point of view of a
farmer or other private investor, by comparing the producers'
revenues with their costs. Farmers will not practice a land use
unless, from their point of view, it pays. Financial analysis can
answer some immediate, practical questions:

 Is this crop, or land use, the most profitable option? Where can this crop be grown, or land use practiced, most profitably?

Economic
analysis estimates the value of a system of land use to the
community as a whole. For example, if prices to the producer are
reduced by taxes or held at an artificially high value by
subsidies, these taxes or subsidies have to be eliminated to
arrive at a shadow price for production. Costs have to be
treated in the same way.

Where there
are clear economic consequences of environmental effects, for
example the reduction of sediment in rivers, the money value to
the community can be estimated and included in economic analysis.

Comparisons
of financial with economic analysis can highlight the need for
policy changes. A particular land use, for example high stocking
rates on communal grazing land (which is free to the producer),
may be degrading pastures and soils, thus destroying land
resources. If financial analysis shows the use to be advantageous
from the farmers' point of view, it is likely to continue,
however environmentally or, in the longer term, socially damaging
it is. Economic analysis should take account of damage to land
resources and the consequent lowering of their productivity.
Policy changes will be needed to make a socially desirable kind
of land use equally advantageous to the farmer. Similarly,
financial analysis may demonstrate that farmers do not have an
incentive to produce a surplus for sale. If government policy
requires increased production, a change of pricing policy may be
an effective way to provide incentives to achieve the desired
change.

Limitations
of economic analysis

Economic
analysis is easier where there is general agreement on social
values and development goals and where there are freely
competitive markets. It is complicated where there are
distortions of the market or where development brings unintended
side-effects, such as pollution or the loss of communal
resources, e.g. access to grazing or fuelwood. It is the job of
the planner to identify these side-effects and to assess their
economic costs.

A serious
limitation of economic analysis is that it is biased in favour of
quick-yielding investments. The technique of discounted cash flow
analysis, which is used to convert costs and benefits arising in
the future to present-day values, has the effect that benefits
accruing more than about 25 years in the future have virtually no
present value at discount rates greater than 10 percent (Figs 10
and 11). This makes it difficult to justify long-term
investments, especially in forestry. The choice of discount rate
has more effect on the value of any long-term agricultural or
forestry development than the predicted yields of crops or
timber.

Finally,
costs and prices can change within a few years and projections of
their future levels are risky. For example, it may be found that
oil-palm is a more profitable crop shall rubber at present-day
costs and prices but, by the time these crops are producing, the
position may have reversed. There is no easy solution to this
problem. For perennial crops or forestry, it may prove better to
adopt land uses that perform best in physical terms, rather than
seeking short-term price advantages. Economic calculations must
be updated periodically during the planning period.

Strategic
planning

Strategic
planning must take a medium- to long-term view to avoid closing
options for the future. Land-use policy must take account of land
suitability, the current economic situation, the production and
services obtainable in relation to the expected future needs and
the possibility of meeting demands from elsewhere.

Land with
severe physical limitations usually offers few viable options.
Land-use planning is more difficult for land that is well suited
for many different uses. Besides physical and economic
suitability, one needs to know the critical importance of
land for specified uses. This means estimating not only whether a
particular area is physically suitable but also whether it is
important that this specific area of land should be used in a
particular way. Examples are protected sites for the preservation
of rare plant communities or the prevention of urban encroachment
on to prime farmland.

This issue
can be addressed by first devising realistic alternative
scenarios of future needs and then comparing estimates of the
potential production with the target production. If a target can
be met easily, no particular area of land is likely to be
critical for that use and, therefore, flexibility of land use is
high. But if most of the physically suitable land will be needed
to meet the target, all such land is critical and flexibility of
land use is low.

The most
profitable land use for each parcel of land can be calculated in
financial and economic terms but this does not fully represent
the effects on the community. Social impact analysis studies the
effects of proposed changes on different groups of people.
Particular attention should be given to effects on women, ethnic
minorities and the poorest sections of the community.

There are
no fixed procedures for assessing the social impact of a proposed
change of land use. The social purpose of the land-use plan
should be laid down at the outset and the impact of each system
of land use can be judged against this goal. Examples of social
factors that might be considered are:

 Population. Its projected size, distribution and age structure; the desirability or otherwise of migration.

 Employment and income opportunities. For example, mechanization may have been considered as a means of achieving lower production costs but this could lead to unemployment.

 Land tenure and customary rights. For example, grazing and water rights.

 Administrative structure and legislation with in which planning must operate.

 Community stability.

Understanding
how present land-use decisions are made is essential in order to
understand the full economic and social implications of any
proposed change. Farming systems analysis can provide an
integrated view by taking the farm family as the decision-making
unit. The case will often be that, what appears to be the optimum
land use when viewed from a district level, is impracticable at
the farming system level. This is because individual families
have to satisfy their needs from their own farm, which will not
include all kinds of land nor the same proportions as the
district or catchment as a whole.

Interface
of land-use planning with rural development planning

Often, a
change in land use will require investment in physical
infrastructure (roads, storage and processing facilities) and
services (marketing, credit, veterinary). New or enlarged
settlements also need infrastructure and social services, such as
water supply, health and education services. These social gains
from a rural development plan may compensate for benefits that
have to be foregone, such as the restriction of communal grazing.
In this respect, land-use planning merges with rural development
planning while changes in land use may support improved
facilities for the community.

CHECKLISTStep 6APPRAISAL OF ALTERNATIVES: ENVIRONMENTAL, ECONOMIC AND SOCIAL ANALYSIS

Responsibility: planning team

 The following studies refer first to individual combinations of land use with land units that have been classed as suitable in physical terms and, second, to alternative combinations of land use that are being considered in the plan.

- Financial analysis: are the proposed land-use types profitable for the farmer or other land users?

- Economic analysis: what is the value of the proposed changes to the community, within and beyond the planning area? Are there areas of land of critical importance (for production or conservation) for certain uses?

- Social impact: what effects will the proposed changes have on different sections of the community, especially women, minority groups and the poor?

- Strategic planning: how do the proposed changes in laud use affect wider aspects of rural development planning, including national goals?